Expropriate the greedy giants¶
Here is my proposal for fixing the bug described in Limited liability, limited profit. Actually it is not my proposal, this idea is being developed by many people, I just try to formulate it.
The idea¶
The solution is theoretically simple: we just need to nationalize a private corporation when it has reached a certain size and therefore has become a danger.
This is a form of expropriation. Expropriation happens when some public interest becomes more important than the private interest. The public interest of subduing the giant is more important than the private interest of its owners. Of course the owners receive a just compensation.
It won’t harm the corporation’s activity, it just changes the recipient of the profit, it is just a new strategy of distributing the profit.
It won’t take away from investors their chance to make profit, it just limits it. It limits the investment-to-profit ratio, it creates a legal possibility to say that the investors of a given corporation have made enough profit.
It would be a simple obligation, as obvious as a yearly tax declaration. Failing to do it in time would simply lead to increasing fines and trying to avoid it would simply be a crime similar to tax evasion.
The conditions that trigger when a private corporation should get nationalized are theoretically clear: when it has generated enough profit (i.e. its investment to profit ratio exceeds a certain threshold), and when it has gone out of control (i.e. its size has become bigger or more powerful than the government who regulates it),
Imagine¶
To illustrate this idea, just imagine that the big tech corporations (Google, Amazon, Microsoft, Facebook, …) would convert to foundations similar to the Wikimedia Foundation.
Implementation note: Google, Amazon, Microsoft and Facebook are registered in the United States. But only the parts that actually exist in the US will go to the US. The Belgian headquarter remains private as long as the Belgian government doesn’t decide to nationalize it in turn.
Why we don’t do it¶
Why don’t we start doing it?
Because reality is more complex than theory. My explanations are obviously naive and simplified. The gory details need to be regulated. For example it will be a challenge to decide how much is a just price. There must be a balance between giving to investors what they deserve and keeping the corporation’s activity alive.
Because it would an unpleasant step. And unpleasant political decisions are unpopular. Of course the owners of an expanding business don’t want to give away their shares.
Because my present formulation might be fully wrong. After all I’m suggesting a fundamental change in a complex system.
Because it will take a lot of energy to plan this step. It needs feedback and help from experts. Who would pay such experts? Definitively not a private corporation.
Because most of those who understand it have no reasonable motivation to fix it because that would deprive them from a convenient source of income. And most of those who would benefit from it have neither the competence nor the power to defend it.
But these are just challenges, not reasons to turn away or to give up hope.
Next step¶
I suggest that we start by repenting. This would mean at political level to declare that we want to change our direction and that we want to start moving towards a new horizon.
My hope is that the present call gets enough attention so that a significant number of individual humans find the courage to unite with those who are ready to make the first step.
My call waits here for other people –maybe you– to take it and work on it, with or without my help.
Examples¶
There are private corporations who did an equivalent step by their own decision and with success. For example The Salt Lake Tribune went nonprofit in 2019 (via Sarah Scire).
An example of how things go: “A company aims to power the world for millions of years by digging the deepest holes ever. And it utilizes a nuclear fusion technology.” (2022-06-28 interestingengineering.com)
An approach that maybe goes in the right direction: In March 2019 OpenAI shifted from nonprofit to “capped-profit” in order to attract capital. They created OpenAI LP (“Limited Partnership”) as a hybrid of a for-profit and nonprofit. The profit is limited to 100x: if you invest a million, you will get “only” the first hundred millions of profit in return. (techcrunch.com)
Moral considerations¶
The imposed conversion into a non-profit organization might “kill” certain activities. We are allowed to “kill” a legal person without mercy. Mercy is a reserved right for humans, it does not apply to legal persons. Private corporations are neither a natural law nor tangible objects, they are just legal persons, i.e. a product of our own law systems.
This proposal is inspired by the Bible, which describes laws like the Sabbatical year and the Jubilee, designed to limit wealth hypertrophy and balances between liberty and equality (compare Liberty vs. Equality). The effect will be yet another example of beating swords into ploughshares. Nothing new, but still a revolution each time it happens.